SD unemployment drops to 6 percent

San Diego County’s unemployment rate dropped to 6 percent in April, but it didn’t reach a nearly six-year-low because of stellar job growth.

The rate fell from 6.9 percent in March mostly because 25,000 people dropped out of the labor force, meaning they’re not counted as unemployed. In April, the county added 2,900 nonfarm payroll jobs, paling in comparison to the number of people who either stopped working, gave up looking for a job, or pursued other options like school.

“It is a serious issue,” said Esmael Adibi, economist at Chapman University. “Usually in a recession these things happen, but once the economy starts bouncing back you expect these people to come back.”

The trend of a declining labor force is not limited to San Diego.

Earlier this month, the U.S. Bureau of Labor Statistics reported that in April 806,000 people dropped out of the nation’s labor force as the nation added 288,000 payroll jobs. San Diego’s drop in April of 25,000 was its biggest since 30,100 people either decided to do something else in September 1990.

Lynn Reaser, chief economist at Point Loma Nazarene University, said the data on labor force participation comes from household surveys and should be viewed with some skepticism at least until the May numbers are released next month.

The hiring in April came mostly in service-sector industries. Leisure and hospitality added 3,100 jobs, mostly in accommodation and food services. Retail trade came in second, adding 1,100 workers. The high-paying professional, scientific and technical services field dropped by 1,500 workers.

“The biotech industry is always shifting as technologies change and companies get acquired,” said Mary Canady, founder of the San Diego Biotechnology Network, noting a recent acquisition of Life Technologies by Thermo Fisher, which involved layoffs.

Economists prefer to look at year-over-year data because it compares like time periods and eliminates seasonality. Although it had the biggest drop from March to April, over the last year the professional, scientific and technical services has added 6,200 jobs, for 5 percent growth. Construction employment is up 4,300 jobs, good for 7.2 percent annual growth. Economists like to see gains in construction employment because building a new home means the owner will have to go shopping for new appliances, flushing more money into the economy.

“It’s just a good distribution of jobs for the year-over-year growth.” said Alan Gin, economist at the University of San Diego.

The education and health services field is also up 4,300 jobs in the county, with Adibi forecasting even larger growth because of Medi-Cal expansion under the Affordable Care Act. That added coverage for 2 million people statewide, increasing demand for services.

Adjusting for seasonal factors, county employers added 1,700 jobs from March to April, the unemployment rate was 6.3 percent, and 18,000 people left the labor force, Reaser said. Reaser said 20,200 left the labor force in September 1990, after her seasonal adjustment.

In the last year, San Diego County employers have added 29,000 people to payrolls, good for 2.2 percent growth. That’s just slower than California’s 2.3 percent, but outpaces the nation’s 1.7 percent clip.